In this thesis I discuss the effects of the free electricity policy perceived by informed observers. The newly elected Chief Minister of Andhra Pradesh, India, Y.S.R. Reddy, implemented a policy granting free electricity for seven hours a day to agriculture in 2004. The subsidy was among the major campaign issues, and an election promise at the Assembly Election that took place in 2004. Two of the three regions of Andhra Pradesh are semi-arid and drought prone. In the years preceding the Assembly Election a prolonged drought led to acute water scarcity in farming. Free electricity was used to pump water from electric bore-wells, and was therefore in practice a subsidy for groundwater. Researchers and farmers reported signs of increased over-extraction of water, such as declining groundwater levels. A higher demand for electricity, combined with the costs of pumping deeper, contributed to worsening electricity supplies. The proliferation of bore-wells resulted in a fierce competition for water, disproportionally affecting the small and marginal farmers. They did not have the financial capacities to sustain competitive drilling for groundwater. There was a comparatively good supply of electricity and water for farmers who could afford bore-wells during the first five years of the free electricity policy. After the death of Chief Minister Y.S.R. Reddy in 2009, an acute leadership crisis emerged in the Congress Party. Renewed drought conditions in the state from 2010-11, together with the worsening administrative performance of the Congress party, contributed to revived sentiments in favor of a separate Telangana.